How to make sure you have "good funds" for your real estate closing

Wire transfers are a very common aspect of the real estate settlement process. But for many consumers, the purchase of a home is their only exposure to wire transfers, which can lead to confusion and unnecessary stress. 

To clear up any confusion and to help prepare our clients for settlement, here is rundown of some of the questions we hear and things to consider regarding wire transfers.

I wired directly via my bank’s website and money has left my account – why don’t you have it yet?

This is a question I have gotten more than once.  Did your bank charge you a fee for this "wire"?  The answer to this follow-up question, is usually "no" or "I paid a small fee." What your bank may not be telling you is that you are actually ordering an ACH (Automated Clearing House) transaction and not a wire directly from your bank to our bank.  

You will need to check in with your bank prior to sending out funds to make sure the fee you are paying is for sending a wire and not a fee for an expedited ACH.  Our bank will not accept ACH transactions for the purchase, because the ACH funds are not considered good funds.

Why aren’t ACH funds "good funds" for purchasing my home?

An ACH goes through a clearing house. Because these are bulk transactions, the funds are not "liquid," or immediately available funds. ACH funds can be adjusted, changed or recalled by the clearing house without authorization from the accountholder. In general, our bank will not accept ACH funds for any of our accounts

Can I write a personal check?

The short answer is no. Personal checks are not considered immediately available funds. Unfortunately, not all personal checks are good when they are written – either by mistake or by design, clients sometimes fudge that funds are available. There are occasions when we can accept a personal check for a small amount of funds at closing.

What are "good funds" for closing?

A wire, cashier’s check, or a certified check is considered good funds. A wire is considered good funds because the funds are wired from your bank directly to our bank via the Federal Reserve and are immediately available. Another example of good funds would be a cashier’s check. These funds are immediately available from the bank.

A certified check is not often used as a vehicle for funds, but is still acceptable. A certified check is a personal check that has been stamped and certified by a bank official the funds are available in the account. The bank then make sure those funds are only good for that purpose. Banks rarely issue certified checks, as it is much easier to issue a cashier’s check. 

So, how do I make sure I have "good funds" for closing?

All banks are different. Have a conversation with your bank early in the process. Find out what your bank needs from you to wire funds. Ask your bank if there are any fees involved to wire funds and how much lead time the bank needs for getting funds to closing on time. Also, make sure you coordinate with your settlement agent and lender to ensure you have the correct bottom line and have the amount of funds to close readily available prior to closing.   

Taking these steps early really help to make the buying process a little less stressful.   

Top posts of 2014

As another year comes to a close at Federal Title, we take a moment to look back at some of the most popular articles posted to our blog in 2014. 

Supplemental tax bill catches some Maryland homebuyers off guard
By Catherine Schmitt

A supplemental tax bill is a bill that is issued when a property is reassessed during the current tax year. Often the supplemental bill will be for a specific period, i.e., a quarter, half or three-quarter tax period. This bill is an additional bill that is sent directly to the home owner and is paid directly by the owner.

Maximum VA loan county limits for 2014 released 
By Jackie Kurz

The Department of Veterans Affairs Loan Guaranty Program recently published county "limits" to be used for VA Loans effective January 1, 2014.

How can real estate agents protect against Internet security threats? 
By Nikki Smith

A solid Web marketing strategy can be a boon to business of any size, but it can also make a business more vulnerable to cyber attacks if proper precautions are not taken.

Headlines: Bizarre story of missing real estate agent ends in tragedy 
By Nikki Smith

The body of missing Arkansas realtor Beverly Carter has been located north of the Little Rock area in a shallow grave, the Pulaski County Sheriff's Office said early Tuesday

5 safety tips for real estate agents 
By Nikki Smith

While rare, attacks on real estate agents do happen from time to time and (sadly) women in particular are vulnerable. In light of this recent event, I thought it'd be good to explore the topic and offer some safety tips for real estate agents.

Avoid the DC recapture tax 'surprise' 
By Todd Ewing

DC Office of Tax and Revenue has recently been imposing a recapture tax against properties that were receiving senior citizen tax relief but ineligible due to the property owner’s death – i.e., a change in eligibility.

A wake-up call from CFPB regarding Marketing Service Agreements 
By Todd Ewing

Federal Title has actively taken a strong stance against both MSA’s and Affiliated Business Arrangements (ABAs), recognizing that such arrangements only enrich the referral sources at the expense of the consumer and further drive up the costs of title charges.

New Maryland bill to limit cost of condo resale package 
By Todd Ewing

There's currently a proposal to limit the fee to $50. Hearings on the legislation continue and we will keep you apprised of the final bill.

DC Council passes the Senior Citizen Real Property Tax Relief Act of 2013 
By Joe Gentile

Ten members of the Council of the District of Columbia voted for and passed the "Senior Citizen Real Property Tax Relief Act of 2013" earlier this week. The bill will now be submitted to DC Mayor Gray for his signature.

Real estate predictions for 2014 
By Nikki Smith

"You've got a migration of folks from all over the country trying to crack the DC [housing] market," said Todd Ewing, whose company handled more than 1,400 purchase closings in 2013. "That trend will continue."

Federal Title now a trusted & verified SSI agent

Federal Title is now a trusted and verified title agent, having completed a standardized risk management process through risk management firm Secure Settlements Inc.

We successfully demonstrated to SSI that we meet federal regulatory requirements. Our implementation of the American Land Title Association's industry best practices was also helpful in attaining this new distinction. 

Mortgage industry risk management is a relatively new market niche, and SSI is the first company to offer title agents a standardized risk management process. Increased risk management in the mortgage industry is also a byproduct of the Dodd-Frank Act, passed in 2010, which mandated new consumer financial laws and created an agency known as the Consumer Financial Protection Bureau. 

Banks are under the CFPB microscope, and they in turn are taking a hard look at third-party service providers to ensure business practices and services are on the up-and-up in terms of the new requirements mandated by Dodd-Frank. Because of the potential for regulatory penalties and legal damages 

We choose to view the increased scrutiny of the CFPB, as well as regulations mandated by Dodd-Frank, as an opportunity to improve our business and further distinguish ourselves from other title companies in the region.

SSI's "Trusted and Verified" seal of approval is a visual queue to our clients that we're looking out for the best interest of all parties involved in the real estate transaction. 

Not all Power of Attorney documents created equal

The topic of "Power of Attorney" comes up pretty frequently in our office. On an almost daily occurrence, clients ask whether or not a Power of Attorney is sufficient for a client’s upcoming real estate settlement.  

Or, at the 11th hour we are informed someone who should be at settlement will not be attending settlement, and then come to find out their Power of Attorney is insufficient.  

Government mortgage entity Fannie Mae also issued new guidelines regarding the use of Powers of Attorney for purchase transactions earlier this year, so it seems like a good time to revisit the topic of Power of Attorney and discuss the differences between various types of Powers of Attorney.

What is a Power of Attorney?

A Power of Attorney is a written document which grants authority to an agent to act on behalf of a principal, in the event that the principal is unable to make decisions or act on his or her own behalf.  

There are several different kinds of Powers of Attorney, and it is important to understand the differences between them.

A General Power of Attorney is one that allows an agent to make all personal and business decisions on behalf of the principal.  It gives the broadest authorizations to the agent, and it is often used to allow the agent to make medical, legal, financial or business decisions for the principal.

In stark contrast, a Specific or Limited Power of Attorney is one that is narrowly drafted to give an agent power to conduct a specific transaction with specific powers.  For example, a principal could have a specific Power of Attorney drafted authorizing his agent to sell his property at 123 Main Street, Washington, DC, including the authority to sign all documents related to the sale, to include the HUD-1 Settlement Statement, Deed, etc.

In addition, a Durable Power of Attorney is one that remains in effect even if the principal becomes mentally incapacitated.  In order for any Power of Attorney to be accepted as a Durable Power of Attorney, specific language must be included in the body of the document (not just the caption of the document) stating that it shall "not be affected by subsequent disability or incapacity of the principal, or lapse of time."  If the specific language is not included in the document itself, the agent’s power to act on behalf of the principal will end if the principal becomes mentally incapacitated.

As each of the jurisdictions in the DC metro area have different requirements for drafting a real estate power of attorney, we strongly recommend that if you require the use of a power of attorney for an upcoming real estate transaction, you contact our office so that we can provide you with the required form for that particular jurisdiction.  

Or, if you already have a power of attorney, please forward a copy to our office for review, well in advance of settlement, to ensure that all the statutory requirements have been included for that jurisdiction.

Maryland rule threatens agents with $5,000 fine

Agents concerned about a rule in Maryland that threatens to fine them $5,000 for non-compliance can rest easy recommending Federal Title to their clients. We are fully licensed and all of our licenses are up-to-date.

Visit federaltitle.com/verify any time to verify our licenses for yourself. And please feel free to share the link at your discretion.

For your information, here is the gist of the new regulation that outline the responsibilities of agents who refer their clients to third-party services:

  • Make a referral in writing
  • Verify that the service provider has a current state license
  • Provide the date on which the agent last checked the state-licensing database
  • Provide an electronic link to the licensing record

All referrals provided in connection with “the provision of real estate brokerage services” are affected by the regulation, according to the Washington Post.

"This regulation’s broad scope includes, but is not limited to, referrals to mortgage lenders, mortgage brokers, real estate appraisers, home inspectors, home improvement contractors, plumbers, electricians, heating, ventilation and air-conditioning contractors, and all others who are required to be licensed," according to the Post.

As always, we're looking out for the best interest of our real estate agents and their clients. If you have questions about Federal Title's licenses, please let us know.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.